Informist, Wednesday, Dec 27, 2023
By Vaishali Tyagi
MUMBAI – The rupee ended at its lowest level in two weeks against the dollar today as state-owned banks persistently bought the greenback for oil marketing companies and other importers, dealers said. This was despite banks selling dollars, likely on behalf of the Reserve Bank of India, they said.
After moving in a range of 15 paise, the rupee ended 0.2% lower at 83.3450 a dollar.
The rupee opened largely steady at 83.2050 a dollar, as a surge in crude oil prices on Tuesday offset the impact of a weak dollar index.
On Tuesday, crude oil prices surged more than 2%, reaching the highest point this month. Ongoing Houthi attacks on container ships in the Red Sea have heightened concerns amongst oil companies about a stable supply.
At 1545 IST, the February contract of Brent crude oil on the Intercontinental Exchange was at $80.93 a barrel compared with $81.07 a bbl on Tuesday, and $79.07 a bbl on Friday.
Shortly after opening, the Indian currency came under pressure as banks stepped in to purchase dollars on behalf oil marketing companies, noting a rise in crude prices, dealers said.
The rupee also came under pressure as some banks bought the greenback on behalf of importers who wanted to make their year-end payments.
Further, banks bought dollars to cover their existing short bets in the futures market ahead of the expiry of the December contract today. This also weighed on the local unit, dealers said.
As banks stepped up their dollar purchases for oil importers, the Indian unit fell to the day’s low of 83.3525 a dollar. However, banks stepped in to sell dollars, likely for the RBI, which limited losses of the local unit, dealers said.
“The oil buying and expiry pulled the rupee down, but RBI is trying to calm it down,” a dealer with a private bank said.
The central bank is likely to have intervened through dollar sales to prevent runaway depreciation of the Indian unit, dealers said.
The rupee also found support from a weak dollar index. The dollar index hovered near the five-month low it touched on Friday as investors are waiting for fresh cues on when the US Federal Reserve may start cutting rates.
A private report showed that the spending momentum in the holiday season in the US was also moderating, a sign of a slowing economy. This cemented hopes of a quicker rate cut, after the Fed’s preferred inflation gauge fell to 3.2% in November from 3.4% in October last week.
At 1628 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 101.40 compared with 101.44 on Tuesday and 101.71 on Monday. The index fell to a near five-month low of 101.43 on Friday.
A surge in domestic share indices also supported the rupee, dealers said. The Nifty 50 closed at 21654.75 points, up 213.40 points or 1%. The BSE Sensex ended at 72038.43 points, up 701.63 points or 1%. During the day, the Nifty 50 hit a record high of 21675.75 points, and the Sensex hit a lifetime high of 72119.85 points.
FORWARDS
Premiums on one-year dollar/rupee forward contracts fell today as banks sold dollars for forward delivery at relatively high premium levels, dealers said.
Earlier in the day, premiums had risen tracking a fall in US Treasury yields, dealers said.
Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.
Premium on the one-year, exact-period dollar/rupee forward contract was at 148.25 paise, against 149.75 paise on Tuesday. On an annualised basis, the premium was 1.77%, against 1.79% on Tuesday.
OUTLOOK
On Thursday, the rupee will take cues from movement of the dollar index and crude oil prices, dealers said. Market participants are now looking forward to the US unemployment insurance weekly claims report, due Thursday.
“With no market moving factors before the close of the year, except for the jobless claims and crude oil inventories from US, the rupee is seen in a range of 83.20-83.40 tomorrow, with the biddish (buying) dollar stance continuing till the month and year-end,” said Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP.
Dealers expect the RBI to continue selling dollars to prevent runaway depreciation of the rupee.
During the day, the rupee is seen in the range of 83.10-83.40 a dollar, with key technical support pegged at 83.50 a dollar.
India Rupee: Sharply down despite likely dollar sales by RBI
MUMBAI – The rupee fell sharply against the dollar as banks persistently bought the greenback for oil marketing companies, dealers said. This was despite banks selling dollars, likely on behalf of the Reserve Bank of India, they said.
The central bank is likely to have intervened through dollar sales to prevent runaway depreciation in the Indian unit, dealers said.
“Since morning, buying interest was there from oil companies but nats (state-owned banks) were also there. They (RBI) sold around 28 levels (83.28 rupees a dollar),” a dealer at a private bank said.
Aggressive buying came in from oil importers, noting a rise in crude oil prices. Some banks also bought the greenback on behalf of importers who wanted to make their year-end payments.
Banks bought dollars to cover their existing short bets in the futures market ahead of the expiry of the December contract today, dealers said.
For the rest of the day, the rupee is seen in a range of 83.00-83.40 against the dollar, with dealers seeing key technical support at 83.50 a dollar. (Vaishali Tyagi)
India Rupee – World FX: Yen down after release of BoJ policy summary
MUMBAI – The yen fell 0.2% against the dollar after the summary of this month’s monetary policy of the Bank of Japan was released today. The report showed that a few policymakers had called for a further debate on the probability of a future exit from the ultra-loose monetary policy by the central bank of Japan.
The pound sterling fell 0.1% against the dollar despite a projection by the Centre for Economics and Business Research that the UK will be Europe’s best-performing major economy in the next 15 years. Therefore, it will narrow its gap with Germany and will extend its lead over France.
The Centre for Economics and Business Research predicted that GDP growth in the UK will be 1.6-1.8% until 2038, helping it retain its position as the world’s sixth-largest economy.
The Australian dollar rose 0.1% against the greenback, while the Canadian dollar was steady.
The dollar index, meanwhile, hovered around the five-month low it touched on Friday. The dollar index weakened after the US personal expenditure price index, the US Federal Reserve’s preferred gauge, showed inflation in November was 2.6% on year, down from 2.9% in October. This reinforced market expectations that the Fed may start cutting rates soon next year.
At 1356 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 101.45 compared with 101.44 on Tuesday and 101.71 on Monday. The index fell to a near five-month low of 101.43 on Friday.
A private report showed that the spending momentum in the holiday season in the US was also moderating, a sign of a slowing economy.
US retail sales rose 3.1% between Nov 1 and Dec 24, ahead of Christmas and New Year, a Mastercard report showed on Tuesday. Retail sales rose less than the 3.7% growth Mastercard forecast in September and last year’s 7.6% rise during the same period.
According to the CME Group’s FedWatch tool, Fed funds futures traders see a 71% possibility of a rate cut at the Federal Open Market Committee’s meeting in March, against last week’s expectation of 69%. (Sourabh Kumar)
India Rupee: Down on banks’ dollar buys for oil cos, importers
MUMBAI – The rupee was down against the dollar today as state-owned banks persistently bought the greenback for oil marketing companies and other importers, dealers said.
“Some PSUs are there on the buying side for oil companies,” a brokerage firm said.” We have the expiry of current futures today, so we are also seeing some short covering happening today.”
Oil importers rushed to stock the commodity, noting a rise in crude prices. Further, some banks bought the greenback on behalf of importers who wanted to make their year-end payments.
On Tuesday, crude oil prices surged more than 2%, reaching the highest point this month. Ongoing Houthi attacks on container ships in the Red Sea have heightened concerns amongst oil companies about a stable supply.
At 1257 IST, the February contract of Brent crude oil on the Intercontinental Exchange was at $81.10 a barrel compared with $81.07 a bbl on Tuesday, and $79.07 a bbl on Friday.
However, the Indian unit found support from a weak dollar index. The dollar index weakened after the US personal expenditure price index, the US Federal Reserve’s preferred gauge of inflation, showed inflation in November was 2.6% on year, down from 2.9% in October. This reinforced market expectations that the US Fed may start cutting rates soon next year.
At 1257 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 101.46 compared with 101.44 on Tuesday and 101.71 on Monday. The index fell to a near five-month low of 101.43 on Friday.
Meanwhile, a rise in domestic equities also supported the Indian unit. At 1257 IST, both the Sensex and Nifty 50 were 0.6% higher.
For the rest of the day, the rupee is seen in a range of 83.00-83.40 against the dollar, with dealers seeing key technical support at 83.50 a dollar. (Vaishali Tyagi)
India Rupee: Tad dn as oil cos buy dlrs; weak dlr index limits losses
MUMBAI – The rupee was a tad down against the dollar as banks bought the greenback for oil marketing companies, noting a rise in crude oil prices, dealers said.
“There is risk in oil, so buying is there from oil companies, which is putting pressure on the rupee. Also, liquidity is less in the market, and later in the day, we expect it (rupee) to go up to around 16/17 (83.16/83.17),” a dealer with a large state-owned bank said.
Crude oil prices rose over 2% on Tuesday, touching their highest level this month, as continued attacks by Houthis on container ships passing through the Red Sea made oil companies apprehensive of stable supply.
At 0916 IST, the February contract of Brent crude oil on the Intercontinental Exchange was at $81.06 a barrel compared with $81.07 a bbl on Tuesday, and $79.07 a bbl on Friday.
The Houthis have continued attacking ships connected to Israel in the Red Sea — one of the world’s busiest shipping routes —, in response to Israel’s actions in Gaza. Risk of further escalation of the conflict in West Asia led to a slight recovery in the dollar index from the five-month low it touched on Friday.
However, the dollar index remained broadly weak, which supported the Indian unit, dealers said. The dollar index weakened after the US personal expenditure price index, the US Federal Reserve’s preferred gauge of inflation, showed inflation in November was 2.6% on year, down from 2.9% in October. This reinforced market expectations that the US Fed may start cutting rates soon next year.
According to the CME Group’s FedWatch tool, Fed funds futures traders see a 71% possibility of a rate cut at the Federal Open Market Committee’s meeting in March, against last week’s expectation of 69%.
At 0917 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 101.52 compared with 101.44 on Tuesday and 101.71 on Monday. The index fell to a near five-month low of 101.43 on Friday.
Today, the rupee is seen in a range of 83.00-83.30 against the dollar, and dealers peg key technical support at 83.30 a dollar.
(Sourabh Kumar)
India Rupee – Asia FX: Most up on weak dlr index; Philippine peso dn
MUMBAI – Most Asian currencies rose against the dollar today, as the dollar index was near the five-month low it touched on Friday, due to expectations that the US Federal Reserve may start cutting rates as early as March.
The dollar index weakened after the US personal expenditure price index, the Fed’s preferred gauge of inflation, showed that inflation in November was 2.6% on year, down from 2.9% in October.
According to the CME Group’s FedWatch tool, Fed funds futures traders now see a 71% possibility of a rate cut at the Federal Open Market Committee’s meeting in March, against last week’s expectation of 69%.
At 0904 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 101.53, compared with 101.44 on Tuesday and 101.71 on Monday. The index fell to a near five-month low of 101.43 on Friday.
The South Korean won was steady against the dollar. In December, exports from South Korea are expected to rise for the third month, though at a slower pace than the previous month. Exports are likely to rise 6.6% on year in December, against 7.7% on year in November, according to a Reuters poll.
The Indonesian rupiah was up 0.5% against the dollar as palm oil prices rose in early trade today. Indonesia is the largest exporter of palm oil, with an export value of about $28 bln the previous year. Palm oil prices rose, tracking a rise in crude and a seasonal dip in the production of palm oil in December. Higher crude oil prices increase the appeal of biofuels, which are made of vegetable oils such as palm oil.
The Thai baht strengthened 0.4% against the greenback after the country’s cabinet on Tuesday approved its central bank’s headline inflation target range of 1-3% for next year, unchanged from this year. The announcement came after headline inflation in the country for November came in at 0.44%, the lowest in almost three years.
Bucking the trend, the Philippine peso fell 0.5% against the greenback as the conflict between China and the Philippines over territories in the South China Sea continues. Philippines’ military spokesperson said on Tuesday that the country was not provoking any conflict in the South China Sea, after China accused the Philippines of encroaching on its territory.
The Malaysian ringgit was up 0.1% against the dollar. (Sourabh Kumar)
India Rupee: Expected range for rupee – Dec 27
MUMBAI – Following are the expected support and resistance levels for the rupee today, as forecast by leading banks and brokerages in an Informist poll:
(Sourabh Kumar)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Ashish Shirke
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (22) 6985-4000
Send comments to [email protected]
© Informist Media Pvt. Ltd. 2023. All rights reserved.
Source: Cogencis
